Robo Advisors and Online Banks — What’s Behind the Scenes
Online banking has changed the way businesses everywhere think about finance. Not only is it convenient, but it comes with several additional benefits that businesses and individuals can enjoy. Much goes into keeping these online accounts running, and the plumbing can be quite complex. Learn all about the systems working behind the scenes of robo advisors and online banks.
What Are Robo Advisors?
When it comes to important financial decisions for your business, it’s common to consult a financial advisor. These experts know how to properly allocate and manage assets to match your investing goals and risk limitations. A robo advisor essentially performs the same role except it’s an automated system rather than an actual person. These automated systems can perform nearly every function a financial advisor may need to for a fraction of the cost.
Robo advisors have become increasingly popular lately, given the fact that they can handle daily portfolio management based on your settings without loss of efficiency compared to a human advisor. The settings are easy to calibrate as they basically consist of you answering a series of simple questions about your goals, finances, and risk tolerance. With honest and detailed answers, the robo advisor can autonomously make decisions designed to forward your unique goals within your singular constraints.
The Rise of Online Banking
As business moved online, banking followed thanks to its convenience and accessibility. With the rise of online banking, businesses and individuals were able to manage their finances through their smartphone or computer, and this came with a collection of benefits. You could access your account at any time without having to worry about operating hours. ATM access is typically free, and security standards easily match those of physical banks.
There are some downsides to online banking to keep in mind. While security measures are state of the art, there are a few practices that will better protect you against having your account compromised such as maintaining effective anti-virus software and not accessing your account through public Wi-Fi networks. The lack of in-person assistance can also hinder the experience, but many online banks are making use of robo advisors to fill this role. With robo advisors and online banking infrastructure working together, managing finances online has never been easier.
Making Online Financing Work
Online financing has revolutionized the business world, and it’s constantly improving. The plumbing behind these systems is quite complex especially since businesses often use multiple institutions for their financing needs. Each business could have a robo advisor of its own autonomously handling finances for them. The primary issue is accessibility as moving assets from one institution to another can be time-consuming.
Fortunately, there are experts working behind the scenes who are constantly tackling this technical challenge to make financing easier for everyone. Entities like Plaid make it simple for businesses to access their financial services anywhere. Payroll and bookkeeping often have to go through several systems before being finalized somewhere, but administrative time can be reduced when users can connect all their financial accounts to a single app.
Keep in mind that the companies providing this infrastructure often market only to other businesses. They deal with application programming interfaces, or APIs, while others take care of the apps themselves. When you utilize an app like Robinhood, for example, to engage in financial activities like trading stocks or distributing payroll, the actual technology behind the systems is driven by online clearinghouses and custodians.
Digitizing Clearing and Custody
Clearing and custodial services are the backbone to financial activities no matter what kind of financial instruments, financing solutions, or account types you’re dealing with. Apex can even apply these services to a variety of modern client experiences like zero-commission models and advisory models. The goal is to digitize clearing and custody to create a seamless experience for all your financial needs.
Creating a simple user experience is accomplished through a suite of APIs. These are systems that allow your apps to communicate with each other and are a necessary part of granting instant access to all your financial accounts and services.
With the plumbing in mind, it’s apparent just how much goes into robo advisors and online banking. This technology is constantly growing, so businesses should take advantage as soon as possible. As more of the world moves online, every aspect of business will have to do the same just to stay competitive. The time saved on administrative duties alone can be enough to justify investing in these advanced platforms.